The Central Board of Direct Taxes (CBDT) has notified Inbar Holding RSC Limited, a pension fund regulated under Abu Dhabi/UAE laws, as a specified person for the purposes of tax exemption under Section 10(23FE) of the Income-tax Act, 1961.
The notification, issued on 5 January 2026, allows income earned by the pension fund from eligible investments made in India up to 31 March 2030 to remain exempt from income tax, subject to strict compliance with prescribed conditions.
Key Conditions for Tax Exemption
As per the notification, the exemption is conditional upon compliance with several reporting and operational requirements. The pension fund must file its income tax returns for all relevant years within the due date under Section 139(1). Additionally, details of every investment made in India must be reported quarterly in Form 10BBB, while an annual compliance certificate in Form 10BBC, issued by a qualified accountant, must be submitted along with the return.
The assessee is also required to maintain segregated accounts of income and expenditure relating exclusively to investments eligible for exemption under Section 10(23FE).
Regulatory and Operational Safeguards
The notification mandates that the pension fund must continue to be regulated under the laws of the Government of Abu Dhabi or the UAE. The earnings and assets of the fund can be used only to meet statutory obligations and defined benefits for participants, ensuring that no private individual derives undue benefit from such income.
Importantly, the fund is prohibited from using borrowed funds-directly or indirectly-for making investments in India. It is also barred from participating in the day-to-day management of Indian investee entities, though oversight mechanisms such as appointing directors for protecting investment interests are permitted.
Consequences of Non-Compliance
The CBDT has clearly stated that violation of any condition prescribed under Section 10(23FE) or the notification will lead to the withdrawal of tax exemption, making the pension fund ineligible for the benefit.
Boost to Foreign Pension Fund Investments
This notification reinforces India's policy intent to attract stable, long-term capital from global pension funds while ensuring transparency, regulatory compliance, and non-interference in business operations. The move is expected to strengthen investor confidence and deepen foreign participation in India's infrastructure and capital markets.
Official copy of the notification has been attached
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